You've run a backtest. Net profit looks good. Is the strategy worth trading? Not necessarily. Two strategies with the same total profit can be completely different to live with: one smooth, one full of terrifying drawdowns. The other numbers in the report tell you which is which.

This guide explains the key backtest metrics in plain language and how to use them together, using the reports from the OPIFY Options Backtester.

Profit metrics

Total Net P&L

Total profit after all costs. A starting point, never the full picture.

Gross Profit and Gross Loss

The sum of all winning trades and the sum of all losing trades, before netting them off.

ROI

Net profit as a percentage of the capital used. It lets you compare strategies with different capital needs.

Win and loss metrics

Win Rate

The percentage of trades that made money. A high win rate feels good but is meaningless on its own.

Average trade, Payoff Ratio

The payoff ratio is the average win divided by the average loss. A strategy with a 40% win rate can be very profitable if its average win is three times its average loss.

Best and Worst Trade

The worst trade shows what one bad day can do. If it would wipe out months of profit, the strategy needs better risk control.

Quality metrics

Profit Factor

Gross profit ÷ gross loss. Above 1 means profitable. Many traders look for comfortably above 1.3–1.5 to leave room for real-world differences.

Trade Expectancy

The average amount you can expect to make (or lose) per trade, combining win rate and payoff ratio. Positive expectancy is the minimum requirement.

Sharpe Ratio

Return relative to how bumpy the returns are. Higher means smoother returns for the same profit.

Risk metrics

Max Drawdown

The largest fall from a peak in your equity to a low point. This is the number that tests your discipline. Ask yourself honestly: could you keep trading after losing this much?

Winning and Losing Streaks

The longest run of consecutive wins and losses. A 9-trade losing streak is normal for some strategies. Knowing that in advance stops you from abandoning a sound strategy at the worst time.

Cost metrics

Total Brokerage and Total Other Costs show how much trading costs ate. Compare them with net profit. If costs are larger than profit, the edge is thin.

Reading the report on OPIFY

• Overview: Net P&L, ROI, win rate and max drawdown at a glance.
• Chart: P&L, equity, ROI and drawdown by day, week, month or year.
• Calendar: monthly P&L and drawdown, to spot bad seasons.
• Trade Logs: every trade with entry, exit, reason and net P&L.

A quick checklist

1. Is net P&L positive after costs?
2. Is profit factor comfortably above 1?
3. Is max drawdown something you can survive, financially and emotionally?
4. Is the worst trade within your risk limit?
5. Do results hold up in different periods?

Frequently asked questions

What's a good win rate?

There's no single answer. It depends on the payoff ratio. Check them together.

Which metric matters most?

Many traders start with max drawdown and expectancy, because they tell you whether you can survive the strategy and whether it has an edge.

This article is for education only and is not investment advice. Past performance does not guarantee future results.